America's Past and America's Future

"Anglo-Saxon institutions focused on individual property rights and commercial transactions, rather than on preserving land ownership in terms of a family or tribal tradition."

In their new book, America 3.0: Rebooting American Prosperity in the 21st Century—Why America's Greatest Days Are Yet to Come,1 James C. Bennett and Michael J. Lotus predict America's future by looking deep into the past. They argue that the unique nuclear-family orientation inherited from the Anglo-Saxon tradition creates a culture that ultimately will reject the model of a centralized welfare state that currently grips our nation.

Bennett and Lotus compare the United States today with Austria-Hungary on the eve of the first World War. In both cases, although many observers perceived the unsustainable character of the existing political arrangements, reforms were postponed.

Concerning the United States today, Bennett and Lotus write:

The political and economic model we now live under cannot go on forever. Some shock may force reform, and may God preserve us from a disaster that knocks down the rickety system before we can replace it and rebuild. Or the American people will at some point get fed up and find the will and the leadership to demand something better. And then the sort of reform program we describe, decentralizing power and unleashing the creative powers of the American people, will happen. (Bennett and Lotus, pages 21-22)

They sketch out their neo-Federalist reforms in the opening chapter, in which they offer a scenario they set in the year 2040:

As a result of the Reforms, the United States now has 71 states, none of which has more than eight million inhabitants. These have arranged themselves into a series of state compacts, and special-purpose agreements between compacts... the Northeast and Great Lakes areas form a network with relatively high taxes and levels of government-supplied social services.... The Southeast has a separate series of networks, choosing lower taxes and levels of service (but with strong church-based social service networks) and state and local ordinances reflecting religious and social conservative values...

Cities, counties, and townships have also taken on more responsibility... unfunded state mandates on local governments... were declared unconstitutional in state after state.... Local government is more important and responsible than it has been in centuries...

Decentralization encourages the "Big Sort" as families seek out the kind of communities they want to live in.... The various "sorted" communities take on a unique community flavor. Visiting relatives in other areas can sometimes cause culture shock.... Some people decry this fragmenting of the culture by region and by community. But with a minimized federal government, the need for national consensus on most issues is nonexistent. Free trade and travel and investment across the country, and military security, are areas of general agreement, and other matters are left to local preference. (Bennett and Lotus, pages 5-20)

In many respects, this scenario represents a return to America at the time of the founding. In what the authors refer to as America 1.0, the central government was limited, in part because people had the "exit" option of moving to adjacent territories that were not yet states. Civil society and local government were strong, as Alexis de Tocqueville famously documented.

Bennett and Lotus argue that law, economics, and politics in America 1.0 emerged to align with what they call the Absolute Nuclear Family.

Its features include: (1) adult children choose their own spouses, without arranged marriages, (2) adult children leave their parents' home to form a new, independent family in a new home, (3) the parents do not have a duty to leave their property to any child, and they may sell it during their lives or leave it by will to anyone they choose, (4) children have no duty to provide for their parents, and (5) extended families are weak and have no control over personal decisions... the underlying Anglo-American family type was the foundation for all of the institutions, laws, and cultural practices that gave rise to our freedom and prosperity over the centuries.

... there has been a discernible and critically important degree of cultural continuity in England, and over into America, for fifteen centuries.

As a result, we have confidence that these cultural patterns will continue to develop... changing only slowly and grudgingly. (Bennett and Lotus, pages 51-53)

Bennett and Lotus argue that this Absolute Nuclear Family was prevalent only in England, parts of Holland, parts of Normandy, and the Danish settlements of Scandinavia. It differed sharply from clan-based or peasant societies.

The Absolute Nuclear Family had a major impact on the institutions that pertain to ownership and transfer of land.

A market economy in land was especially important, and unusual. Ownership of land has, in most cultures, been bound up with particular families. A family would be identified with a particular plot, with strong emotional ties to it, and that family's unique attachment to its bit of land was recognized and protected. This is characteristic of peasant communities, in all parts of the world. But the English... have never been peasants.... Because land changed hands relatively frequently, establishing who owned any particular piece of real estate became a matter of great importance. (Bennett and Lotus, page 105)

... Nuclear families need free-standing homes, and the prospect of an autonomous life, for each new family in each new generation. There is always pent-up demand for real estate among English-speaking peoples. (Bennett and Lotus, page 115)

As a result, Anglo-Saxon institutions focused on individual property rights and commercial transactions, rather than on preserving land ownership in terms of a family or tribal tradition. The resulting legal and cultural structures paved the way for a capitalist economy with limited government.

For Bennett and Lotus, the era of centralization of power in the United States (what they call America 2.0) was a detour, brought on by industrialization and World Wars. The Industrial Revolution placed a premium on managing large concentrations of capital, in railroads, steel, electric power, and automobile manufacturing. The tools of bureaucracy and planning that were used to build these industries were borrowed by the central government, particularly during the two World Wars.

The authors view the welfare state as an awkward import from 19th-century Germany. They write:

German society and culture was founded on the authoritarian family... the father maintains lifetime control over his adult sons, their wives, and unmarried daughters. At the father's death, the eldest son inherits all the family land and becomes the new head of the family.... At the time of the Industrial Revolution and the emigration from the land to the town, the eldest son in a rural family was unable to carry out his duty of care to the sons who left, and the role of the father was transferred to the state.

... None of (Franklin Delano) Roosevelt's programs were sold as automatic entitlements, that is, something that was coming to you by right because it was your share of the national patrimony, because Americans did not believe in a national patrimony. Social Security and unemployment insurance were presented as... a contract like any insurance contract, where you paid a premium to the insurers and received a benefit under stated circumstances.... They have been construed as contractually obligated property and most Americans think of them that way. (Bennett and Lotus, pages 169-170)

Today, technology no longer favors heavy concentration. In fact, large governmental units, including big states within the United States, the federal government, and the European Union, are proving increasingly dysfunctional. If nothing else, their inability to meet future fiscal obligations portends significant changes. The government is no longer able to maintain the fiction that its large income transfer programs are contractual in nature.

Bennett and Lotus argue that reformed government in America 3.0 would be strong but localized. They believe that the most unworkable aspect of the American welfare state is its scale, covering a population of three hundred million.

... social-democratic solutions on the European model have always succeeded the best when undertaken on a small scale. Denmark and Sweden are often-cited models of successful social democracy; it is useful to remember that they are quite small; Sweden at 9.5 million is smaller than North Carolina, at 9.6 million, and would only be the eleventh largest US state, ahead of New Jersey. Denmark, at 5.5 million, is smaller than Wisconsin and would rate twenty-first in size, ahead of Minnesota. (Bennett and Lotus, page 229)

The neo-Federalist model that they propose would also address contentious social issues by devolving such issues to the state and local level. "Our strategy should be to push as many contentious issues as possible to the most local level possible, and then reducing the transaction costs of exit as low as possible." (Bennett and Lotus, page 229)

They offer an interesting approach to tax reform under this neo-Federalism:

In a future America, where almost all of the domestic functions of the federal government have been handed back down to states, or multistate compacts, federal revenue needs might be met at least in part by giving states funding contribution quotas and letting each state, or multistate compacts, decide how best to make them. (Bennett and Lotus, page 23)

The vision that Bennett and Lotus put forth is not the technocratically-run national system that most contemporary politicians and pundits presume is ideal. Nor is it the philosophically-driven rights-based society that libertarians might prefer. However, if the authors are correct in their cultural anthropology, then their idea of America 3.0 is what fits best with our culture.

*Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of five books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; and Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy. He contributed to EconLog from January 2003 through August 2012.